The regulator -- as part of its announcement on water company bills and investment for the next five years -- has said price limits will increase by an average of just 0.5 per cent a year.
It has also given recognition to the role of catchment management schemes to help tackle diffuse pollution in water.
NFU deputy president Meurig Raymond welcomed the decision.
"Striking a balance between continued investment and keeping bills down is a real challenge. Ofwat has recognised the success of catchment management approaches, working in partnership with farmers, to help improve water quality.
"Our direct involvement in a pilot catchment management scheme the WagriCo project, working closely with Wessex Water and others, clearly demonstrated to us that early farmer engagement, robust evidence and good advice are all key to the success of any catchment scheme.
"We look forward to working in partnership with Water UK and water companies to help make these schemes work on the ground."
Ofwat's announcement, based on business plans published by each water company, allows some 100 catchment management schemes to take place.
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